Sausage Ingredients

This is the confession of an avowed longtime policy junkie. I love to watch (and advocate for) laws being made. The nuances of the language, the parrying of interest groups, the political jockeying of the legislators themselves, it all fascinates me.

It’s often an ugly process. Most of you have heard the old Bismarck quote: “Laws are like sausages; it is better not to see them being made.”

I’ve had the opportunity to work on advocacy efforts on a weird variety of topics including services for troubled youth, women’s issues, flood plain development and internet gambling. (I’ve rambled a bit in my career.)

With much pleasure, I had the chance to found and chair the Interactive Gaming Council (IGC) from 1996 to 2004. In its heyday, this organization had over 120 companies as members and attempted to develop standards and do other things to position the fledgling industry. The fact that I chaired it as long as I did is not really a testament to my leadership but a function of an industry under siege. Our members, primarily offshore suppliers and operators, did not want to be the face of the industry for obvious reasons. As a publisher and event organizer, I had the freedom to do that.

In its early days, the industry had few friends. Getting legislators to stick their necks out to advocate for the industry was nearly an impossible task… even under the guise of consumer protection. So shooting for proactive legislation was a pipe dream. The best we could hope for was fending off the prohibition bills routinely offered up by Senator Kyl and Representative Goodlatte, et al. In spite of being up against such idioms as “Click the Mouse, Lose the House,” we were able to hold them off for many years.

But, as in the sausage-making analogy noted earlier, that was all undone in 2006, when the Unlawful Internet Gambling Enforcement Act (UIGEA) was passed literally in the dead of night. Called at the time the Frist Amendment (since it was a favor for Iowa Senator Bill Frist, who was running for president), this legislation shut down payments for iGaming. It did so with no hearings and in what those in the business called “a midnight drop,” quietly stuck into a “must pass” bill.

So the industry has been living with this prohibition since 2006. There has obviously been some positive progress on the state level, with three states (New Jersey, Delaware and Nevada) leading the way to legalize iGaming. But progress has been painfully slow in the past year or so. One prospective state, California, has been introducing legislation to regulate online poker now for eight years with no forward movement. Most insiders point to ongoing wrangling among the land-based gaming interests as to who gets what slice of the pie as the reason for the impasse. Fights among card rooms, tribes and racetracks have impeded legalization.

Now, fast-forward to the daily fantasy sports (DFS) controversies. Those of us who attended G2E 2015 heard the storyline on DFS before all hell broke loose. Since early October, the landscape for DFS has changed dramatically.

Some have asked if DFS will follow the same legal path as online poker. I would argue that it’s already eclipsed it dramatically. A case in point is California. Internet poker advocates have been introducing legislation to regulate, license and tax internet poker for over eight years. But the conflicts among the stakeholders, as mentioned before, have scared lawmakers from action. Frankly, if the industry cannot provide a united front, a state legislator is not inclined to stick his or her neck out.

But a DFS bill is moving forward quickly in California. It passed the Assembly almost unanimously with only one dissenting vote. The tribal gaming organization in that state and the national Poker Players Alliance have cried foul, saying they should get poker up and running first. But, this industry suffers from a true lack of advocacy and leadership in that regard.

When the American Gaming Association pulled out of advocating for iGaming due to internal conflicts on the issue, there was a true vacuum which has impeded our industry’s growth in the U.S. regulated market.

Why the immediate results for daily fantasy sports? It’s anyone’s guess, really. It’s a widely popular pastime and has been for a very long time. (I was not surprised at the fantasy sports exemption in UIGEA when I was lobbying on Capitol Hill, since many staffers I met with had their fantasy sports screens up on their computers when we met.)

Perhaps, that popularity alone accounts for the speed of action… especially if it’s the lawmakers themselves. Or perhaps the DFS industry has somehow (quietly, for sure) activated a more vocal constituency of their players to speak out than poker has.

We’ll also be watching the policy efforts on behalf of legalized sports betting in the U.S. To me, there is a perfect storm developing led by the change of attitude of many of the sports leagues (sans the NFL and NCAA). Add to that the popularity of DFS, which admittedly is one step away from sports betting. And a handful of states, looking for additional revenue sources, are already drafting legislation to allow sports betting should the federal prohibition be repealed or tweaked to allow it.

So, can we get it together as an industry? Possibly. Given our past experience, I’m not inclined to bet on it. But we can always hope, and find some ways to work together to make it happen.

Sue Schneider is one of the pioneers of iGaming. She is the founder of the iGaming North America conference and is also editor of Gaming Law Review and Economics.
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